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U.S. West Texas Intermediate and international-benchmark Brent crude oil futures edged higher on Friday, but this was not enough to turn the market higher for the week. The price action suggests the market may have already absorbed the planned release of crude from the strategic reserves of many oil consuming nations.
A weaker U.S. Dollar may have also contributed to the move. Since crude oil is a dollar-denominated asset, foreign demand tends to increase when the greenback declines.
On Friday, May WTI crude oil futures settled at $98.26, up $2.23 or +2.32%. June Brent crude oil closed at $102.78, up $2.20 or +2.14% and the United States Oil Fund finished at $74.12, up $1.01 or +1.38%.
Putting a cap on prices for most of the week was the news that member nations of the International Energy Agency (IEA) will release 60 million barrels over the next six months, with the United States matching that amount as part of its 180 million barrel release announced in March.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through $93.81 will signal a resumption of the downtrend. A move through $105.59 will change the main trend to up.
The main range is $61.86 to $126.42. Its retracement zone at $94.14 to $86.52 is the major support controlling the longer-term direction of the market.
The intermediate range is $85.81 to $126.42. Its retracement zone at $101.32 to $106.12 is resistance.
The short-term range is $126.42 to $92.20. If the main trend changes to up then its retracement zone at $109.31 to $113.35 will become the next resistance area.
Short-Term Outlook
The direction of the May WTI crude oil market early Monday is likely to be determined by trader reaction to the main 50% level at $94.14.
Bullish Scenario
A sustained move over $94.14 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for a surge into the Fibonacci level at $101.32.
Since the main trend is down, look for sellers on the first test of $101.32. Overcoming it, however, could trigger a further rally into the main top at $105.59, followed by the 50% level at $106.12.
Bearish Scenario
A sustained move under $94.14 will signal the presence of sellers. Taking out $93.81 will indicate the selling pressure is getting stronger. This could lead to a test of the main bottom at $92.20.
A trade through $92.20 will change the main trend to down. This could trigger an acceleration to the downside with $86.52 the next major target.
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